Glossary of Investment Terms

Account managers

Companies which deal with the administration of investment holdings. In the past this role would normally be the responsibility of the same company that ran the fund. For example, an ISA with Artemis Income Fund would have been held in an account with Artemis Fund Managers. If you are in a supermarket they will act as your Account Manager.

ACC Accumulation Units:

a unit type designed for growth. Income is used to raise the value of units rather than purchasing new units.

Alpha

A measure of a fund manager's ability to produce returns above those returned by the market in which he or she is investing.

Asset allocation

The process by which a portfolio is constructed from proportioned investment into a variety of investment types (such as cash, equities, property and corporate bonds).

Bottom up

A style of investment that starts with a specific analysis of a company the fund manager is thinking of investing in.

Corporate bond fund

A fund that invests in corporate borrowing (loans made to companies in exchange for a fixed level of interest).

Equities

Investments in the form of shares in listed companies.

Fund manager

A company that manages the investment behind a collective investment fund. For example, Artemis manage the Artemis Income Fund.

Fund supermarket

An account manager that can offer funds from a range of fund managers. For example, you can hold Artemis Income Fund in the same account as Neptune Income.

ICVC

Investment Company with Variable Capital. Another updated form of the Unit Trust.

INC Income units:

a unit type designed to produce income. Income can be paid to you or re-invested in more units. May be referred to as distribution units

Investment fund

Any investment holding outside of ISAs. ISA An Individual Savings Account. A tax efficient wrapper for which you can buy funds.

Managed income or growth

In these funds the fund manager is able to alter the balance of Equities to Corporate Bonds held offering the chance to make the most of different market conditions.

OEIC

Open Ended Investment Company. An updated form of the traditional Unit Trust.

Options

The right (but not the obligation) to buy or sell shares at a specific price at a stated point in the future. There are two types of options Calls (the right to buy) and Puts (the right to sell).

Pairs trades

When a positive outlook for one company is mirrored by likely poor performance by a competitor a fund manager can seek to profit from both by taking Long and Short positions respectively.

PEP

A Personal Equity Plan. The forerunner of the ISA. Old PEPs have now been merged into ISAs.

Plan manager

Another term for Account Manager. (See above)

Re-registration

The movement of existing unit holdings into a fund supermarket whilst keeping the funds in the form of stock.

SIPP

Self Investing Pension Plan. A pension scheme where you get to choose what your pension is invested in, from a wide range of asset classes.

Stake holder pension

A simplified personal pension scheme with a cap on charges and contribution levels.

Switch

Moving from one fund to another whilst keeping the same account manager.

Taking a long position

Using an option to profit from a rise in the price of a share.

Taking a short position

Using an option to profit from a fall in the price of a share.

Top down

A style of investment that starts with analysis of the bigger picture of global and national economies and themes, narrowing at each stage to identify types of company the fund manager will look to invest into.

Transfer Moving

the monetary proceeds of an account from one account manager to another, involving the sale of the first holding(s) and the purchase of the new fund(s).

Unit trust

A type of collective investment fund, similar to OEIC & ICVC.